The North Carolina Senate unanimously approved a bill Aug. 13 that
would allow the state to issue transportation bonds financed with federal
The bill now heads back to the House for final approval before going to
Gov. Mike Easley for his signature.
The measure would allow the state to issue $900 million in
grant-anticipated revenue vehicles, or GARVEE bonds, to use on transportation
projects. No specific projects have been identified, The News & Observer reported.
The funding program breaks from the traditional
pay-as-you-go method and allows the state to borrow money against the federal
transportation dollars that come each year to pay for construction. The bond
issue – or loan – is based on the assumption that federal funding in future
years would pay off the bonds. This allows the state to get money needed for
the project up front.
Because the bonds are repaid with future
federal dollars, they don’t affect the state’s credit or impose an ordinary
Supporters say it makes sense to use future
funds now, when highway construction costs are cheaper, the newspaper reported.
They note the cost of construction is escalating at a rate higher than the cost
to borrow money to build roads.
Opponents worry that spending future dollars
now could leave the state in an even tighter pinch on projects in years to
come. They also worry about relying on future revenue that is expected but not
The funding plan – HB254 – has the support of the governor.